# What is the relationship between income and productivity? **URL:** \ **Category:** Great Debates\ **Created:** [April 26, 2015, 1:55am UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547 "2015-04-26T01:55:50Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [April 26, 2015, 2:52pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/21 "2015-04-26T14:52:51Z")
And let me note once again that “productivity” is a term of art in economics, so since we’re having a discussion about economics and if you want to use that term to mean something else, you need to put your definition out there for everyone to see. ---
**Author:** ![even\_sven](https://avatars.discourse-cdn.com/v4/letter/e/dfb087/32.png) [@even\_sven](https://boards.straightdope.com/u/even_sven)\ **Post date:** [April 26, 2015, 4:19pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/22 "2015-04-26T16:19:14Z")
> [@John\_Mace](#): > > I don’t know how salaries are set in Cameroon. But in a more or less free market economy (that includes most of the industrialized world), salaries are set by how the market values your work. That may or may not be correlated to productivity. You could be an artist cranking out 7 paintings a week, but if no one likes them, you’ll not make much even though you are incredibly productive. > > In the US, [public school) teachers salaries are set somewhat indirectly, since they are government employees and they pay depends to a large extent on how much taxes people are willing to pay. There might be some “market information” lost as that get translated to salaries. I think, though, that school boards try and set salaries at comparable rates to what teachers could make in the open market. If they don’t, then they should. > > The idea that salaries must be tied to productivity is yet another attempt to validate the labor theory of value. Something I thought had been thoroughly debunked in earlier threads by the OP. But we don’t live in a “free market” economy when it comes to labor. There are massive, massive restrictions on who gets access to what labor markets-- immigration controls. This means that US unskilled labor is protected from the Indian guy that will work for pennies on the dollar, while skilled labor in other countries is prevented from accessing the markets where they would get paid the most. I’m not saying this is a bad thing. But it is a reality. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [April 26, 2015, 4:29pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/23 "2015-04-26T16:29:12Z")
> [@even\_sven](#): > > But we don’t live in a “free market” economy when it comes to labor. There are massive, massive restrictions on who gets access to what labor markets-- immigration controls. This means that US unskilled labor is protected from the Indian guy that will work for pennies on the dollar, while skilled labor in other countries is prevented from accessing the markets where they would get paid the most. > > I’m not saying this is a bad thing. But it is a reality. The forces that set labor rates would still be the same, even if the actual rate might change. It’s not productivity that sets labor rates, it’s supply and demand. Of course you can raise the demand by restricting the supply, and in the case of American workers, that is happening due to immigration controls. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [April 26, 2015, 5:14pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/24 "2015-04-26T17:14:29Z")
> [@Robert163](#): > > Ok, I’m getting tired, almost too tired to think well. I started out making a real easy example, very loaded to each side, teacher vs interior designer but I think your example, welder vs baseball player is good too. Ironically, and I don’t know why, I guess it never occurs to them, people complain about the baseball player who makes 10 million a year but they don’t even bother to mention the owner of the team, worth probably 5 billion dollars who sits on his ass and does nothing to contribute to winning the game. Oh well… The people with the most wealth are not baseball players or movie stars, but people who own things… like baseball teams and movie studios. And many of them do nothing at all. Celebrities at least produce entertainment. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [April 26, 2015, 5:21pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/25 "2015-04-26T17:21:37Z")
> [@The\_Other\_Waldo\_Pepper](#): > > Well, it’s because you and I and et cetera made decisions about the relative worth of seeing the latest Hollywood movie vs saving the lives of poor children – and after we decided to give that money to guys in Hollywood, _they_ made decisions about the relative worth of boob jobs for their wives vs saving the lives of poor children. > > Hollywood wives don’t just _happen_ to have lots of money while poor children have none; Hollywood wives have money because people decided to give them money, and those people have money to give because yet other people made decisions too. I don’t have to take responsibility for the decisions that other people make. Only my own. I do agree we have a fucked up culture though - one where looks and status and money matter more than fairness, justice or kindness. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [April 26, 2015, 6:03pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/26 "2015-04-26T18:03:06Z")
I just glanced over the thread again and don’t see that we have a shared definition of productivity that we’re discussing. Is productivity not a measure of the efficiency of increasing value and utility? Not necessarily value and utility to me, obviously. Managers and owners certainly increase value and utility. Good ones do, at least. Bad ones lose money or get fired. As to the relationship between income and productivity, they’re clearly linked, but not perfectly. If someone asks for and is given a raise for performing the same work, I doubt he had a similar step-change in productivity. But a person whose productivity drops might get shitcanned quickly. So there’s some hysteresis. There are transaction costs. There are occluded market signals. ---
**Author:** ![eschereal](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/eschereal/32/18939_2.png) [@eschereal](https://boards.straightdope.com/u/eschereal)\ **Post date:** [April 26, 2015, 6:42pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/27 "2015-04-26T18:42:15Z")
> [@John\_Mace](#): > > … Of course you can raise the demand by restricting the supply … Sorry to pick a nit, but would you mind restating that? Demand is like the quasi-constant variable: restricting supply raises _prices_. And, I think, the effect of that is to throttle demand, at least WRT non-essentials. If you increase supply, causing prices to decrease, demand increases, somewhat, as more buyers are able to afford a product/service. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [April 26, 2015, 6:53pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/28 "2015-04-26T18:53:08Z")
> [@eschereal](#): > > Sorry to pick a nit, but would you mind restating that? Demand is like the quasi-constant variable: restricting supply raises _prices_. And, I think, the effect of that is to throttle demand, at least WRT non-essentials. If you increase supply, causing prices to decrease, demand increases, somewhat, as more buyers are able to afford a product/service. Not a nitpick. Carelessness on my part. Yes, I meant to write “price”, not demand. Not sure what I was thinking… ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [April 26, 2015, 7:30pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/29 "2015-04-26T19:30:18Z")
> [@John\_Mace](#): > > OK, then, it’s not. > It isn’t, so it doesn’t make sense to do that. > Gee, are those the only choices we have-- whom to punish? Are you sure about that? I personally don’t think taxes are a way of “punishing” anyone; I was referencing the quotes from upthread. (A lot of people do think that way, though.) I think that taxes are, or should be, a way of controlling inflation. (I realize most people don’t think of it that way.) ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [April 26, 2015, 8:05pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/30 "2015-04-26T20:05:51Z")
> [@John\_Mace](#): > > And let me note once again that “productivity” is a term of art in economics, so since we’re having a discussion about economics and if you want to use that term to mean something else, you need to put your definition out there for everyone to see. I’m using it in the ordinary meaning: “the quality, state, or fact of being able to generate, create, enhance, or bring forth goods and services”. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [April 26, 2015, 8:08pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/31 "2015-04-26T20:08:27Z")
> [@LinusK](#): > > In the interest of full disclosure, I’d argue it’s rarely true: income is a measure of how much you can consume, not how much you produce. You would argue that? Then, why don’t you? Lay out the argument in support of your thesis instead of just stating it. ---
**Author:** ![HoneyBadgerDC](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/honeybadgerdc/32/1033_2.png) [@HoneyBadgerDC](https://boards.straightdope.com/u/HoneyBadgerDC)\ **Post date:** [April 26, 2015, 8:12pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/32 "2015-04-26T20:12:06Z")
I was a shop foreman in a union truck repair shop. If comparing just mechanics to mechanics it is hard to show a correlation between income and productivity. Some non union shops the guys might be making $15.00 per hour and be hard working good mechanics. In the union shop you may have someone totally unqualified who is lazy and carries a bad attitude making $30.00 per hour. Without that protection from the union the good mechanics would be pushing the bad mechanics to either keep up or move over. ``` I would think that a high paid position should be able to ask more of its employees. ``` ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [April 26, 2015, 8:38pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/33 "2015-04-26T20:38:52Z")
> [@John\_Mace](#): > > You would argue that? Then, why don’t you? Lay out the argument in support of your thesis instead of just stating it. Well the first part is tautological. Income is the measure of the amount of money that you get (from whatever source). The more money you get, the more you can consume. (The more stuff you can buy.) Someone who makes a million dollars a year can buy more stuff that someone who makes $100 a year. The second part is the subject of the thread. You could break it into two parts. The first part is whether anyone actually thinks income is a measure of how much you produce. If there are people who think that - and I think there are many - the second part is whether it’s true. I think the relationship between how much you produce and how much income you have is weak, at best. The executives at Enron made millions defrauding investors, for example. Some of them eventually went to prison for it, but not all. Some cashed out early, or otherwise evaded prosecution. One bought the state of Wyoming, and lives a very comfortable life, without (so far as I know) producing anything at all. More recently, Wall Street and rating agencies made billions selling fraudulent bonds. No person was prosecuted, and the people involved wound up keeping most or all the money they made. The result was the worst recession since WWII. So in that case it wasn’t just that they made massive amounts of money producing nothing (or at least nothing of value); they made massive amounts of money setting fire to the economy as a whole. ---
**Author:** ![cladking](https://avatars.discourse-cdn.com/v4/letter/c/4af34b/32.png) [@cladking](https://boards.straightdope.com/u/cladking)\ **Post date:** [April 26, 2015, 8:38pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/34 "2015-04-26T20:38:52Z")
There was a time that there was a high degree of correlation. Now days there’s an slightly inverse correlation as work is defined. This slight inverse correlation becomes extremewly pronounced in the top 1% of income. It would be cheaper in fact to double their pay and make them stay home. Obviously there are many exceptions to this and by percentage most exceptions are near the bottom of the scale. A small percentage at the top are very important to the overall functioning of the system. ---
**Author:** ![Robert163](https://avatars.discourse-cdn.com/v4/letter/r/4af34b/32.png) [@Robert163](https://boards.straightdope.com/u/Robert163)\ **Post date:** [April 26, 2015, 9:20pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/35 "2015-04-26T21:20:20Z")
> [@Oakminster](#): > > You mean the owner that provides employment (and pays salaries) to the entire roster of players on the team, along with coaches, trainers, groundskeepers, office personnel, stadium workers, etc? The guy without whom none of those people would have jobs? The guy who takes the risks associated with owning a business? The guy who pays for the advertising, printing, travel, insurance, promotions, etc? > That owner? Yes, that owner, the one who sits on his ass during the game and cheers like everyone else in the stadium. you act as if owning a major league franchise is a “substantial financial risk” or a “substantial financial burden”. the vast vast majority of franchises are simply a cash cow, they virtually never loose money. that is not to say that the points you make are not valid. they are. but not for a sports team. (unless you are starting a new sports league). your points would be valid for a situation like a tech company for example. i’m sure there are lots and lots of situation where the points you make are valid, the owner takes a risk and has burdens, not with a sports franchise. ---
**Author:** ![Robert163](https://avatars.discourse-cdn.com/v4/letter/r/4af34b/32.png) [@Robert163](https://boards.straightdope.com/u/Robert163)\ **Post date:** [April 26, 2015, 9:22pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/36 "2015-04-26T21:22:39Z")
> [@LinusK](#): > > The people with the most wealth are not baseball players or movie stars, but people who own things… like baseball teams and movie studios. And many of them do nothing at all. Celebrities at least produce entertainment. That’s the point. The owner of the New York Giants doesn’t actually do anything. All they do is sign checks. ---
**Author:** ![Robert163](https://avatars.discourse-cdn.com/v4/letter/r/4af34b/32.png) [@Robert163](https://boards.straightdope.com/u/Robert163)\ **Post date:** [April 26, 2015, 9:25pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/37 "2015-04-26T21:25:20Z")
> [@Stratocaster](#): > > Everyone (those gainfully employed and not in some sort of performance counseling situation) by definition contributes exactly what they’re worth to the employer. How are you valuing their contribution, if not by the dollars they’re paid for it? Do you have something else objective in mind? What? Most employers would pay people less if they could do so an still retain their employees. No offense but your statement seems incredibly naive and idealistic. Do you disagree with the idea that many, but not all, employers would pay less if they could? ---
**Author:** ![Robert163](https://avatars.discourse-cdn.com/v4/letter/r/4af34b/32.png) [@Robert163](https://boards.straightdope.com/u/Robert163)\ **Post date:** [April 26, 2015, 9:32pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/38 "2015-04-26T21:32:25Z")
> [@John\_Mace](#): > > I don’t know how salaries are set in Cameroon. But in a more or less free market economy (that includes most of the industrialized world), salaries are set by how the market values your work. That may or may not be correlated to productivity. You could be an artist cranking out 7 paintings a week, but if no one likes them, you’ll not make much even though you are incredibly productive. > > In the US, [public school) teachers salaries are set somewhat indirectly, since they are government employees and they pay depends to a large extent on how much taxes people are willing to pay. There might be some “market information” lost as that get translated to salaries. I think, though, that school boards try and set salaries at comparable rates to what teachers could make in the open market. If they don’t, then they should. > > The idea that salaries must be tied to productivity is yet another attempt to validate the labor theory of value. Something I thought had been thoroughly debunked in earlier threads by the OP. I agree that an artist should not have a guaranteed income. I am an artist, well, not a professional one, and I still agree with you. But school teachers should be paid more. So should police officers and similar situations. Stating that “the market demands” doesn’t really do much for me. It seems that by putting the phrase “the market demands” into a sentence people feel they can justify almost anything. ---
**Author:** ![eschereal](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/eschereal/32/18939_2.png) [@eschereal](https://boards.straightdope.com/u/eschereal)\ **Post date:** [April 26, 2015, 10:31pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/39 "2015-04-26T22:31:59Z")
> [@Stratocaster](#): > > Everyone (those gainfully employed and not in some sort of performance counseling situation) by definition contributes exactly what they’re worth to the employer. How are you valuing their contribution, if not by the dollars they’re paid for it? Do you have something else objective in mind? The value of a worker’s contribution is how much more profit the company makes due to the work they do. Which is to say, the employee’s share of production minus the employee’s pay. “Productivity” is a measure of how much revenue the company can extract from an employee, the more you pay them, the less productive they will be, by definition. As an aggregate value, “productivity” is either meaningless or a measure of how rapidly the class divide is expanding. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [April 26, 2015, 11:12pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/40 "2015-04-26T23:12:19Z")
> [@Robert163](#): > > Yes, that owner, the one who sits on his ass during the game and cheers like everyone else in the stadium. you act as if owning a major league franchise is a “substantial financial risk” or a “substantial financial burden”. the vast vast majority of franchises are simply a cash cow, they virtually never loose money. that is not to say that the points you make are not valid. they are. but not for a sports team. (unless you are starting a new sports league). your points would be valid for a situation like a tech company for example. i’m sure there are lots and lots of situation where the points you make are valid, the owner takes a risk and has burdens, not with a sports franchise. I suggest a few minutes spent on your web search engine of choice to clear up your misconception of the profitability of sports franchises. [Previous page](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547.md?page=1) [Next page](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547.md?page=3)